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Abercrombie & Fitch has inventory levels of $399,795 thousand and $436,701 thousand at the end of...

  1. Abercrombie & Fitch has inventory levels of $399,795 thousand and $436,701 thousand at the end of fiscal-year ending 2016 and 2015 respectively. Cost of goods sold for 2016 is $1,298,172 thousand.
  1. Calculate the average days inventory outstanding for 2016. (1/. )
  1. Suggest four ways that Abercrombie & Fitch might improve average days inventory outstanding. (2/.   )

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Answer:

a)

average inventory = (399795 + 436701)/2 = 418248

inventory turn over ratio = cost of goods sold/average inventory

= 1298172/418248

= 3.10 times

assuming 365 days a year

average inventory days = 365/inventory turnover ratio

= 365/3.10

= 117.60 days

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